UEMS’ healthy pipeline of project launches offer good visibility
KOTA KINABALU: UEM Sunrise Bhd’s (UEM Sunrise) healthy pipeline of project launches and the attractive locations of its vast landbanks are strong indicators of good earnings visibility for the master developer.
According to AmInvestment Bank Bhd (AmInvestment Bank) in a recent company report, UEM Sunrise currently has numerous ongoing key projects such as its Serene Heights at Bangi with a gross development value (GDV) of RM3.1 billion; Solaris Parq at Dutamas with a GDV of RM2.9 billion; Estuari, Puteri Harbour with a GDV of RM6.5 billion; East Ledang at Iskandar Puteri with a GDV of RM4.1 billion; and Almas, Puteri Harbour at Iskandar Puteri with a GDV of RM1.9 billion.
Its total unbilled sales comes in at RM4.8 billion and with a slew of new launches planned in financial year 2018 and 2018 (FY18 and FY19), the group is expected to see boosts in its revenue in the near term.
Meanwhile, for the first half of the year (1HFY18), UEM Sunrise has lined up RM356.8 million worth of new launches in the high-rise and landed residential segments.
These include the affordable RM300,000unitsatCondominium Kiara Kasih at Segambut and the ‘nature themed’ units at Serimbum, Iskandar Puteri that are priced between RM630,000 and RM1.4 million.
Meanwhile, its total landbank sits at a vast 12,926 acres which its most recent acquisition being a 72.7-acre plot of land in Kepong at RM416.4 million via a 50:50 joint-venture with Mega Legacy Equity SB.
The Kepong land has been earmarked for a mixed development with an estimated GDV of RM15 billion over a 15year period while UEMS still has a balance of RM31 billion in yet-to-be-launched ongoing projects.
“These are mainly located at the southern and central regions, providing earnings visibility and driving the company’s growth well into the next decade.”
However, that being said, the bank remained cautious on the property sector on the whole due to continued elevated home prices; low loan-to-value offered by banks; and buyers’ inability to qualify for a home mortgage due to their already high debt service ratios.
“In addition, the still subdued consumer sentiment against a backdrop of rising cost of living and elevated household debts is holding consumers back from committing themselves to the purchase of big- ticket items like a house.
“However, we do see a bright spot in the affordable segment,” added the bank.
All in all, AmInvestment Bank cut its FY18 earnings forecast for UEM Sunrise by 1.1 per cent while increasing its FY19 earnings by 5.5 per cent after inputting new information and assumption into their model.
“We expect the group to register net earnings of RM243.4 million, RM271.3 million and RM233.2 million for FY18, 19 and 20 respectively.”
AmInvestment Bank maintained its ‘hold’ call on UEM Sunrise with a revised fair value of RM1 from RM1.25 per share.